Buying a business is no small task, and many first-time buyers are initially intimidated by the paperwork required to make a sale happen.
The good news is the paperwork, contracts and red tape required for buying a business are totally do-able.
You just need to stay on top of requirements, have patience and have the right help.
After you have signed non-disclosure agreements and have had a chance to check out a few businesses, the next set of paperwork you will encounter will be your purchase contract.
What is a purchase contract?
When you find a business you really like, you will put together an initial offer with your business broker and present that offer to the sellers. This initial offer opens up the negotiating table, and after a bit of back and forth between both parties you will hopefully have your amended offer accepted by the sellers.
Your initial offer, once accepted, essentially becomes the purchase contract. This contract is basically a guide for what will happen during the transaction process.
What will it include?
It will vary from transaction to transaction because businesses are inherently complex and each one is very different from the next. Some basic items the purchase contract will cover? The price offered, the length of the due diligence period and the length and scope of training are a few of the things covered in your contract, but there will also be many more.
The complexity of this agreement is one of the major reasons the professional help of an experienced and qualified business broker is necessary for a successful transaction. Drawing up a purchase contract on your own could leave you in a lurch if you forget something critical.
An important point about seeking professional help with your purchase contract: your business transaction attorney could also help you with the purchase contract – however, notice we said business transaction attorney. Your family law attorney or the attorney you used for a civil lawsuit are not going to understand a purchase contract the way a business transaction attorney would. Remember that an attorney’s sole purpose is to protect you from any and all risk – and all businesses come with an inherent amount of risk. This contradiction means it will be tough to properly advise you if your attorney has never been a part of a business transaction. The solution is to use the advice of a business transaction attorney and business broker instead.
Do you have more questions about the purchase contract in a business sale? Would you like to know more about what’s included? Ask us! Feel free to leave any questions or comments and we would be happy to help.
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